medium · Private Equity paper-lbo

In a distressed restructuring, the 'Fulcrum Security' is defined as:

1. The debt class most likely to be converted into equity in a reorganization.
2. The revolving credit facility that supplies emergency liquidity during the case.
3. The senior-most secured debt tranche that is guaranteed full par recovery.
4. The existing common equity holders, who retain full control of the board seats.

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